New wind farms built in Wisconsin and neighboring states have enabled the state’s electric utilities to comply with the first phase of the state’s renewable energy standard, and most are well on their way to meeting the state’s 2015 green energy target.

Those are the findings of a new Public Service Commission report that concluded the state’s renewable energy sales increased 93% between 2006 and 2010. As a result, green power accounted for more than 7% of electricity sales by utilities and cooperatives last year.

A law that passed with overwhelming bipartisan support spelled out the renewable requirements – that Wisconsin move from having 4% of its power come from renewable power in 2005 to 6% in 2010 and 10% in 2015.

By putting extra renewable energy projects in place early, utilities banked credits that can be used to comply with the state’s target.

As a result, the report says, most of the state’s utilities are on track to meet the 2015 standard, and a few – including WPPI Energy in Sun Prairie – have already complied.

Efforts to comply with the standards have led to construction of several new wind farms in Wisconsin, although more than half of the utilities’ wind power sales last year came from projects built in Iowa, Minnesota and Manitoba.

The latest project to be built is the Glacier Hills Wind Park northeast of Madison, which started construction last month.

With 90 turbines, the We Energies project will be the largest wind farm in the state.
Easing up on renewables

But the cost to utility customers of adding more renewable projects has led to talk of relaxing the state’s renewable mandate by making it easier for utilities to comply. Options include no longer requiring more renewables after 2015, delaying future requirements or other changes.

“The renewable portfolio standard is one of the issues that we’ve been talking to folks about, and we’ll continue to talk to them,” said Chris Schoenherr, executive assistant to Administration Secretary Michael Huebsch.

“We don’t have a definitive position yet,” he added.

Todd Stuart, executive director of a group representing heavy users of electricity, said the commission and Legislature should look for ways to reduce future compliance costs for customers.

“The renewable mandate does not sunset at the end of 2015,” he said. Instead, the law requires utilities to keep adding renewable energy as sales grow so that 10% of the state’s electricity continues to come from renewable sources.

“If Wisconsin’s policy objective is to have our electric rates once again become competitive, then adding a ton of intermittent new resources just doesn’t make economic sense,” said Stuart, of the Wisconsin Industrial Energy Group.

But there’s disagreement on how much renewables have added to rates in recent years. The state PSC hasn’t calculated it because so many factors come into play, said Robert Norcross, PSC energy administrator.

The biggest factors in rate increases over the past five or 10 years have been plans to build new coal-fired power plants and high-voltage transmission lines in the state as well as the need to add environmental controls to aging coal plants. Other factors include volatile and at times high natural gas prices, climbing coal prices and rising diesel prices charged by rail companies that ship coal to Wisconsin power plants.
More costs to come

In a recent analysis, We Energies said customers’ rates have risen by 2.3% because of its $295 million Blue Sky Green Field wind farm that was built in 2008. That was one increase during a decade in which rates rose 62.6% for a variety of reasons, mainly higher fuel costs and new power plants.

“It’s easy to pick on renewables,” said Charlie Higley, executive director of the Wisconsin Citizens’ Utility Board, a customer group. While it’s true that wind farms have resulted in requests for price increases, he said, “so do multibillion-dollar investments for coal plants, whether it be for building new ones or retrofitting older ones.”

But for We Energies customers, much of the bill for renewable projects has yet to come due. The utility lags its state peers in complying with the renewable mandate.

We Energies tapped a bank of credits it had earned in prior years to enable it to comply with the 2010 requirement, and now is building the $367 million Glacier Hills Wind Park in Columbia County. It also won approval recently to build a $255 million biomass power plant in Marathon County that is to open in 2013.

With the wind and biomass projects, We Energies is on track to meet the 2015 mandate, but would need to build or buy power from more wind farms by 2016 or 2017. In a filing with the PSC, the company said it would need to add the equivalent of at least two large wind farms by 2015 to meet the standard.

As a result, a delay in implementing the state’s renewable power standard could delay the need for We Energies customers to pay for additional projects or power purchases.
Worried about delays

By contrast, several other utilities say they don’t need to add much more to meet the renewable standard. WPPI Energy, a Sun Prairie-based public power company, told regulators this year that “any delay in implementing this increase results in WPPI Energy incurring additional costs for renewables that others may be able to avoid or at least delay.”

When Democrats controlled the Legislature last year, lawmakers wrestled with whether to increase the renewable mandate to a more aggressive goal of 25% of the state’s electricity by 2025. More aggressive standards have been adopted in a number of states, including Minnesota, Illinois and California. The Wisconsin proposal died amid concerns about the economy and cost.

The new report comes as renewable energy advocates are concerned that investment in the state will slow as a result of initiatives launched by the Walker administration and the Legislature, now under Republican control. Among the changes: a move to restrict wind turbine siting and a law that will allow utilities to use large hydroelectric projects, including those planned for Manitoba, to comply with the mandate. Another would allow unlimited use of renewable credits.

The administration’s intent is to address both property-rights concerns about wind turbines as well as near-term cost concerns for customers at a time when Wisconsin has ample power to meet its needs.

Michael Vickerman, executive director of the advocacy group Renew Wisconsin, said those actions plus the suspension of renewable energy incentives by Focus on Energy and We Energies threaten to “suck the oxygen” out of the renewable sector in the state.

Taken together, the actions mean that the state has already taken steps to soften the renewable mandate, Higley said. As a result, he sees no need for another bill to ease compliance.

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